F and I when buying from a dealer demystified. Shopping and negotiating for a new vehicle is an exciting time. Sometimes we have to be bold to get the best price possible and we have to use every trick in the book to get the best deal.
It is also during this preliminary stage that we have the opportunity to test the different models to find the one that will suit our needs and desires. We also have the opportunity to equip it with all the accessories that will increase our driving pleasure.
Therefore, once we have agreed on a purchase price that suits both parties involved, the final step is to go to the financing office to meet with the director responsible for this department. If you have the possibility to purchase your new snowmobile without taking out a loan, this step will be easier and faster. If not, as with most people, this stage could be frustrating because you will have to make decisions that will have consequences.
Even if you have spent several hours negotiating with the sales representative, this visit to the F & I (Financing and Insurance) office should not be taken lightly, as this is where you will sign all the required legal documents associated with the purchase of a vehicle. This may include signing financing agreements or if you are buying with cash, handing over the required payment. This is handled by a dedicated sales manager, specially trained and qualified with the various forms and contracts required.
The director in charge of this department will inform you of all the services offered. He or she will also be able to prepare the credit file if necessary for an acceptance to a financing. He is also qualified to answer a multitude of questions and to produce a summary of the payments that you will have to reimburse according to the amount borrowed and the term chosen.
Think of this agent as a consultant who will be able to ask you questions and listen to your needs. Each person’s situation is different and he or she is equipped to offer you the best rate of financing according to your conditions.
Once you are in F&I, you can expect the process to take half an hour or more depending on the amount of paperwork you have to sign. It can depend on whether you are financing or paying cash. More importantly, it may also depend on whether you are purchasing one of the many products and services that the F&I manager will offer. This will be the other main task of the F&I manager: closing the deal previously established with the sales representative.
This agent usually deals with several financial institutions and will also be qualified to direct you to the one that will offer you the best interest rate. Remember, it is your money that is at stake and you have the final say at every step. Interest rates are generally set in correlation with the amount borrowed and the term. The borrower’s credit history will be a factor given the element of risk that the financial institution takes based on the debtor’s history.
This is where doing research beforehand will literally pay off, because you’ll know what products might interest you. Also, “just $20 more a month” may seem like a good deal, but multiply that by months and years and the interest rate … well, it’s suddenly a very heavy load.
Here are some of the most common products:
Extended warranty
Probably the most commonly purchased F&I product. It’s also one of the most expensive. On the surface, it makes sense: protect yourself from future maintenance and repair costs after the basic new vehicle warranty expires, especially as the vehicle ages and is more likely to require maintenance and repair.
However, the value of any warranty is largely determined by how it is used. If your snowmobile needs a lot of repairs during the extended warranty period, it will be worth it. If your vehicle is foolproof and has not shown any signs of weakness, you have wasted a lot of money for nothing. Of course, you won’t know this answer at the time of purchase, and as such, it’s hard to put a value on this warranty, as you don’t have a Crystal ball to predict the future. You can bet that the price quoted by the dealer is based on his profit margin and not your portfolio taking into account risk factors.
It is also important to note that in some cases, you can purchase an extended warranty at any time before your new vehicle warranty expires. Ask the sales manager about this option, as it differs from manufacturer to manufacturer. However, most offer a time frame for signing up, so it’s probably best to just say “no” and see how things go as your snowmobile ages, taking into account the time frame allowed to sign up.
Vehicle maintenance contracts/maintenance plans.
This plan offers prepaid service visits for your snowmobile. Basically, this means you pay for scheduled maintenance visits up front, locking in the price to avoid future increases in labor or parts costs. It also means that you literally won’t have to hand over any money for these future maintenance costs. Finally, it’s important to note that the maintenance plan only applies to that specific dealer. You never know when you, or the dealer might move.
A better idea would be to take the amount the dealer quotes you and put it in an interest-bearing account. Use it for maintenance when the time comes.
Loan Insurance
Loan and credit insurance, otherwise known as creditor insurance or debt insurance, can be used to pay off the balance of a loan in the event of illness, accident, disability or sudden death. So if you become unable to work due to one of these circumstances, your insurance will help cover what you owe your lenders or creditors.
If you have a job that provides you with salary insurance during an illness, you may find that loan insurance is not necessary. On the other hand, if you are self-employed or do not have access to salary insurance with your employer, you may have a heavy burden to continue making your payments. Therefore, you must take these parameters into account to make a clear decision that would have heavy consequences in case of an unforeseen event. This insurance guarantees the assumption of the monthly loan repayments in case of incapacity or disability of the subscriber. The guarantees that cover work stoppage are the ITT (temporary work incapacity) and IPT (permanent total disability) guarantees.
In the same vein, for death insurance, you wouldn’t want to leave a vehicle with a payout amount beyond its market value. So, think of the beneficiaries, as they would already be grieving the loss of a loved one, so you don’t want to give them an additional financial burden. Simply put, if you purchase life insurance along with your disability insurance, the balance of your loan will be paid off in full upon your death, saving your family from having to assume your debt.
You should be aware that you are entitled to a credit refund if you pay off your loan in full or sell your vehicle before the agreed-upon term. The sales manager will be there to assist and guide you through this process.
Be aware that if you wish to opt out of loan insurance, the manager is within his or her rights to have you sign documents attesting that he or she has offered it to you and that you have declined the offer.
F and I when buying from a dealer demystified – Conclusion
Keep in mind that you have the final say at every stage of the transaction. This sales manager works on commission and it will be to his advantage to sell you as much service as possible in his own interest. So be discerning and ask yourself what you really need, because if you don’t, after the fact, you may have second thoughts. Although this manager is also supervised by the AMF (Autorité des Marchés Financiers) and is professionally bound by the rules of ethics of his profession, do not succumb to sales pitches from him such as: “Usually, everyone takes this protection! Examine each product he offers you and ask yourself if you really need it for your specific situation.
When in doubt, take a break and put off finalizing your purchase. Ask your friends and family for advice, because everyone has already gone through this stage and we have all heard horror stories where people wanted to finalize in a hurry, not being fully aware of the documents they have signed up for. Your money is at stake in the end and you have the right to refuse the products that are proposed to you. An informed consumer is worth 2!
